Recent Blog Posts

  • Entertainment Expense is Gone in 2018
    Yes…you read it correctly.  There are a lot of benefits for the small business owner in the Tax Cuts and Jobs Act, but this isn’t one of them. It truly is a major blow to small and big business, and the cost of doing business just went up.        Example. Tom is an insurance agent and small business consultant. He takes one of his clients golfing and out to lunch to give guidance on a business transaction and sell an insurance policy.        Write-off? Nope. Because the activity occurred in 2018, Tom gets no deduction and arguably the meal isn’t a write-off either. First, all small businesses and entrepreneurs are affected; no one is exempt from this provision in the new tax law. Sole-proprietors, S-Corporations, LLCs and C-Corporations – all beware. Prior law So long as an expense was directly related to (or, in some cases, even ... Read more
  • Has the Estate Tax been Repealed and What about the Gift Tax?
    There has been a lot of talk about the myriad of tax law changes with the passage of the “Tax Cuts and Jobs Act” (TCJA), but let’s not forget about the estate tax. Although the House of Representatives’ version of the recent tax bill had included language to repeal the federal estate tax in its entirety by the year 2025, the final version that was signed by President Trump did not repeal the estate tax. Instead, the TCJA doubled the estate tax exemption from $5.49 Million to $11.2 Million (taking into account inflation). Of course, the average American’s net worth is far less than this and maybe that’s why no one is talking about it, but I thought it was at least worth a short article to set forth the facts. This means that even less Americans will pay federal estate tax. Thus, if an individual is worth less than $11.2 ... Read more
  • 1099 Rules for Business Owners in January 2018
    Over the past few years there have been a number of changes and updates regarding the reporting rules for the mysterious 1099-Misc Forms.  I say “mysterious” because many business owners simply guess as to what the rules are and oftentimes get exasperated and just give up choosing to file nothing at all.  This can be a dangerous result as the penalties can add up quickly. First, the general rule is that business owners must issue a Form 1099-MISC to each person to whom you have paid at least $600 in rents, services (including parts and materials), prizes and awards, or other income payments. You don’t need to issue 1099s for payment made for personal purposes. You are required to issue 1099 MISC reports only for payments you made in the course of your trade or business. The penalties for not doing so can vary from $30 to $100 per form, ... Read more
  • GOP versus Small Business – Tax Bill Update
    First of all, kudos to Wisconsin Senator Ron Johnson and the other Senators working behind the scenes to help protect small business owner’s interests in this critically important tax bill. The truth of it is, the House bill does very little for small business owners, as I will set forth in detail below. The Senate bill however has a glimmer of hope for us, and hopefully Senator Johnson’s objections and concerns will be heard. Over the past three weeks, I have been extremely vocal about my personal concerns regarding the House Bill and what should change in the legislation before it becomes law. In fact, I will go as far to say that the House version hurts small business, let alone helps the average small business owner. In fact, I was shocked to see Treasury Secretary Mnuchin’s comments that this legislation “substantially helps small business owners”. Either his definition of ... Read more
  • Five Benefits of the Solo 401K
    For many Americans, saving for retirement is like exercising or eating healthy, we know we should do it but most of us don’t.   In fact, a survey published by the Washington Post reported that over 70% of Americans are not saving enough for retirement and a study by the US Government Accountability Office reported that as many as half of American households 55 or older have NO retirement savings at all!   A recent Merrill Lynch report estimates the average cost of retirement to be nearly $750,000 but this obviously depends on your standard of living and life expectancy.   With advances in technology increasing our lifespans, we need to plan accordingly in order to have what we need in retirement. The Solo 401K is the ideal vehicle for small business owners with no full time employees to save for retirement through its generous contributions limits which can offset your taxable income.  ... Read more
  • The New “Centralized Partnership Audit Regime” – A Seismic Shift or Much Ado about Nothing?
    An article on IRS audits…just what you needed to read before going to bed tonight, and I’m not kidding. Now, don’t be embarrassed if you haven’t heard of the Centralized Partnership Audit Regime (“CPAR”). If you think it sounds like something out of a George Orwell novel that only CPA’s and Tax Attorneys care about – well then, you’re half right. It’s not from Nineteen Eighty-Four. It is a real thing; the sort of thing people in my profession like to bring up when they’re trying to sound smart at cocktail parties – the most boring cocktail parties EVER. Anyway, despite the sleep-inducing name, the CPAR is something many of our clients need to be aware of – namely clients who file (or should be filing) an annual Form 1065 Partnership Tax Return. So, if you are involved in a partnership, try to stay awake – this is for you. ... Read more
  • 8 Core Tax Concepts Every Entrepreneur Needs to Know
    Of the many virtues that entrepreneurs have, one such virtue is the desire and ability to get as much information and knowledge as they can by reading books, attending speaking events, researching on the internet, etc. However, ‘taxes’ aren’t one of the topics entrepreneurs seek out, and it’s for a justifiable reason. Many believe the topic of taxes to be either too boring or overly complicated, and it typically is when presented improperly.  Yet, so many business owners are starving and anxious to learn tax and legal principles. Inspired by those teachers of tax and legal topics that make it truly interesting, I have tried to summarize in this article the top 8 Core Tax Concepts that every entrepreneur needs to know: The IRS treats different types income VERY differently. This principle is at the CORE of so much of our advising. For example, income you make in your operational ... Read more
  • Creative Planning Options with a Revocable Living Trust
    Estate planning is something most know they should do, but most American adults simply haven’t gotten it done.  In a survey available from AARP,  60% of American adults do not have an estate plan.  The number gets even higher for some minority populations.  In most cases, this is simply due to procrastination that “I just haven’t gotten around to it.”  Many people that I speak to as a lawyer simply don’t understand the consequences of passing away without an estate plan. One of the primary reasons for a Trust is to avoid probate, which is a court supervised process for the distribution of a decedent’s assets (especially real estate) when a person dies without a trust.  However, the revocable living trust affords many creative planning opportunities that generally cannot be accomplished without a comprehensive estate plan.  Many individuals who have not consulted with a professional estate planner do not ... Read more
  • How a Short-Term Vacation Rental is Treated for Tax Purposes
    The popularity of renting a house, townhome or condo on a short-term basis through websites such a Airbnb, BRBO has exploded over the past few years. Just to give you an idea of how big the industry really is, consider that Airbnb is currently active in more than 65,000 cities and 191 countries, and it is projected to log 100 million guest arrivals in 2017. Looking to book a night or two in New York City? Airbnb has more than 43,000 active listings. Yes, the profits can be significant compared to a standard monthly rental property, but only when the conditions are ideal. Real estate investors should be cautious and prudent before assuming their property could be the perfect vacation rental property. A quality and successful vacation rental property needs to be in the right location with consistent demand and not run into any local regulatory snags. However, assuming all ... Read more
  • How a Short-Term Vacation Rental is Treated for Tax Purposes
    The popularity of renting a house, townhome or condo on a short-term basis through websites such a Airbnb, BRBO has exploded over the past few years. Just to give you an idea of how big the industry really is, consider that Airbnb is currently active in more than 65,000 cities and 191 countries, and it is projected to log 100 million guest arrivals in 2017. Looking to book a night or two in New York City? Airbnb has more than 43,000 active listings. Yes, the profits can be significant compared to a standard monthly rental property, but only when the conditions are ideal. Real estate investors should be cautious and prudent before assuming their property could be the perfect vacation rental property. A quality and successful vacation rental property needs to be in the right location with consistent demand and not run into any local regulatory snags. However, assuming all ... Read more
  • Why Entrepreneurs need to keep their Day Jobs- At least for a while.
    I know this may sound a little odd coming from a man that has been advocating small business since age 8. I was out there on the street trying to talk my little brother into helping me with my lemonade stand and various other hair brain schemes even through high school. However, one thing I’ve learned all these years in business myself, and also consulting thousands of clients, is that although there can be amazing rewards and benefits of entrepreneurship, it is still is an ‘up and down’ financially volatile roller coaster ride…especially in the beginning. Thus, whenever I have a new client call me on the phone with unbridled exuberance tell me they are marching into their boss’s office tomorrow to quit their job and quote the song made famous by Johnny Paycheck telling their boss to ‘shove it’…I tell my client to slow down and hold on for ... Read more
  • Why Purchase a Rental Property Before the end of the Year?
    This may seem bold to hear from your CPA.  I’m not a realtor selling you real estate, but as a tax lawyer, I am actually trying to help you save taxes and build wealth at the same time. I consistently repeat and encourage my clients and students everywhere I go that working towards buying a rental EVERY year is critical to building a retirement and wealth.  It’s a goal that is tangible, emotional, conceivable and realistic for most Americans. Now I realize a rental may not be for everyone, AND some of you have had a bad experience before with real estate.  However, I would at least like to encourage you to consider it and get the process started.  Maybe you already have a deal in the works. A good rental property strategy will not only to build an incredible long-term and sometimes immediate tax strategy, it will inevitably build ... Read more
  • Simple is Sexy: Maximize Retirement Contributions for Tax, Asset Protection, and Estate Planning Benefits
    Many clients appreciate our ability to see the big picture.  For example, when it comes to asset protection, estate planning, and tax planning, none of these practice areas happen in a vacuum, meaning the methods and tools used for asset protection will almost always affect and impact your estate plan and/or tax plan, for good and for bad, and vice versa.  These areas should be coordinated together.  While a lot of clients appreciate that, they often times overlook or fail to maximize the full benefits that come with funding and investing with a retirement account because it just doesn’t seem, well, sexy.  Keep reading. Asset Protection. Effective asset protection rarely involves a transfer of all of your assets into some foreign off-shore jurisdiction.  For many people, there are much less expensive and effective ways to protect your assets and one of those ways is to put your money into ... Read more
  • Corporate and LLC Meetings, Minutes & Resolutions
    Business owners are often advised on the importance of holding annual meetings, documenting their minutes, and exercising proper corporate formalities as a method of preventing the “piercing of the corporate veil.” However, although many people know they should be holding meetings and doing their minutes, our experience with new business owners who do not have a history of being in the “corporate” world or serving on a “board of directors” is often a feeling of confusion and cluelessness as to what meetings and minutes are and what purposes they serve. Although the general purpose of meetings, minutes and resolutions are to document and authorize acts taken by an entity, company meetings can accomplish several other important goals that we feel are critical to a business’s long term success, for example: Strengthen the corporate veil and asset protection Document goals and objectives of the business Structure tax planning and establish bookkeeping ... Read more
  • Corporate and LLC Meetings, Minutes & Resolutions
    Business owners are often advised on the importance of holding annual meetings, documenting their minutes, and exercising proper corporate formalities as a method of preventing the “piercing of the corporate veil.” However, although many people know they should be holding meetings and doing their minutes, our experience with new business owners who do not have a history of being in the “corporate” world or serving on a “board of directors” is often a feeling of confusion and cluelessness as to what meetings and minutes are and what purposes they serve. Although the general purpose of meetings, minutes and resolutions are to document and authorize acts taken by an entity, company meetings can accomplish several other important goals that we feel are critical to a business’s long term success, for example: Strengthen the corporate veil and asset protection Document goals and objectives of the business Structure tax planning and establish bookkeeping ... Read more